Your Health Insurance Refund Check Is Coming

Watch your snail-mail box. You may be due for a refund check from your health insurance company. Under provisions of the Affordable Care Act (aka ObamaCare), instead of funding administrative and marketingexpenses, health insurers must put a certain percentage of total policyholder premiums toward patient care like visits to the doctor and hospital stays, and quality improvement activities like gym memberships and wellness information. For large employer-sponsored plans, the amount requirement is 85%, for individual and small business plans, it’s 80%. Those insurers who failed to meet the threshold must issue refunds direct to employers or individuals no later than August 1 of this year.

The Kaiser Family Foundation estimates that the average refund will be $127, although it could be as high as $300 in some states or as little a buck in others. (Sorry, if you get your insurance through a privateemployer or state or local government, you won’t see a dime, unless you contributed some portion of your pay toward your premium in 2011.) The actual amount you receive will depend on the state you live in and will be based on data submitted to the federal government by the insurance companies.

In total, almost a third of everyone who purchased individual health insurance will be getting a refund check, although like the actual amounts, the percentages will vary by state. For instance, less than 1% of residents of Hawaii, Vermont, Iowa and Rhode Island will see a health insurance refund. By contrast, 92% of Texas residents will because insurers in the Lone Star state spent too much on admin and too little on actual patient care.

If you are one of the folks who gets a health insurance refund, you’ll notice that it includes a statement from the insurance company telling you it’s coming your way courtesy of the Affordable Care Act, perhaps in an effort to sway flagging public opinion for government health care reform. If you don’t get a check, you’ll probably still get a letter explaining that your insurer has met the Affordable Care Act patient care spending targets.

However, if the Supreme Court strikes down the entire Affordable Care Act as unconstitutional, insurance companies probably can’t be forced to comply with the rebate provision of the law.